McDonald's in China Agrees to Unions

By DAVID BARBOZA

Published: April 10, 2007

A year after Wal-Mart Stores unionized all its stores in China under pressure from the government, McDonald's is cooperating with China's large state-controlled union to allow the formation of more unions in its 750 outlets here.

A McDonald's spokesman said Monday that the company was working with union officials to help establish a union at its stores in southern Guangdong Province, one of the country's wealthiest regions.

The announcement comes nearly two weeks after a state-controlled newspaper in Guangdong reported that some McDonald's, KFC and Pizza Hut restaurants in Guangdong were violating the law by paying employees less than minimum wage and denying some workers full-time benefits.

Officials at McDonald's and at Yum Brands, which operates nearly 2,000 KFC and Pizza Hut outlets in China, say that they obey the law. But McDonald's officials say they are now investigating the allegations.

Guangdong labor authorities quickly announced an investigation into the matter, and the country's largest state-run union, the All-China Federation of Trade Unions, accused McDonald's and Yum of underpaying their workers.

One trade union official, who declined to be identified because he was not authorized to talk to a reporter, said on Monday, however, that McDonald's had recently begun making efforts to work with labor organizers and had even circulated information within some of its Chinese stores about unions.

A McDonald's spokesman said that the company already had unions in some of its Chinese stores and that even before the pay complaints arose, the company had been cooperating with the All-China Federation of Trade Unions in Guangzhou, the capital of Guangdong Province.

''Since November of last year, McDonald's China has been in productive discussions with the Guangzhou City union officials, making progress in setting up a union branch,'' the company said in a statement issued Monday.

A Yum Brands official in Shanghai did not respond to an interview request. The effort to form unions in multinational corporations in China is one of the latest developments in a country where economic growth is strong but workers are beginning to complain more publicly about unfair labor practices.

While unions have been around here for a long time, mostly in state-owned companies, experts say that they have traditionally been weak in China. In many cases, they work in tandem with management, particularly in state-run companies. They have not been known to challenge management or to bargain for higher pay. More often than not, experts say, the unions have been used by management to coordinate employee activities.

But recently, union leaders have promised to fight for workers. And last year, the country's biggest union won a significant victory by forcing Wal-Mart to allow unions in all 62 of its stores here.

Now, the All-China Federation of Trade Unions says its goal by the end of this year is to have unions active in 70 percent of the foreign-invested companies operating here.

''The laws, such as the union law and the labor law, rule that workers have a right to unionize, and no one should intervene,'' said Li Jianming, director of the international affairs department at the trade union federation, in Beijing.

One indication of the union's growing power in China is its role in helping prepare a new draft labor law, which is expected to pass this year. The labor law could give unions greater power.

That prospect is creating tension between American and European multinationals and the country's labor leaders and labor rights activists.

Union leaders contend that China needs stronger laws to protect workers, particularly low-wage migrant workers, who often work seven days a week and rarely get benefits.

Lawyers for many big foreign companies, however, say that China's labor laws are already adequate, but that there has been little enforcement of them, partly because of bribery, corruption and the country's weak legal system.

Even without a new labor law, foreign retailers and factory owners are facing growing pressures from labor rights activists and Chinese and foreign media outlets, which regularly investigate labor conditions here and publicize their findings, often to the embarrassment of big foreign companies.

Last year, for example, two journalists exposed poor working conditions at a company with investors from Taiwan that makes iPods in China. Wal-Mart suppliers have been the target of countless investigations. Also last year, a disturbance broke out at a toy maker that supplies Disney, McDonald's, Mattel and other big brand names because of poor working conditions, according to labor rights activists.

In the recent McDonald's case, a team of Chinese journalists went undercover, posing as workers, to get inside several McDonald's and Yum Brands restaurants in Guangdong Province. The newspaper reported that McDonald's and KFC sometimes would not sign labor contracts with some workers, and that other employees were forced to work up to 10-hour shifts. Some workers, the newspaper said, were paid only about 52 cents an hour, when the region's labor authorities require city employers to pay about 95 cents an hour. In its statement, McDonald's said: ''McDonald's China always adheres strictly to the relevant national and local regulations, and we are consulting with the proper authorities to get the facts.''

McDonald's in Tomato Accord

MIAMI, April 9 (AP) -- McDonald's agreed on Monday to pay a penny more a pound for its Florida-grown tomatoes to help increase wages for the migrant workers who harvest them.

The agreement, which comes after a two-year campaign by an advocacy group, calls for a third party to verify that farm workers who pick the tomatoes used on McDonald's sandwiches receive the increase. McDonald's, which is based in Oak Brook, Ill., will also require its suppliers to follow a workplace code of conduct that the workers will help create.

A McDonald's USA spokesman, William Whitman, said the cost would not be passed on to consumers.

The announcement was made by the nonprofit Coalition of Immokalee Workers and McDonald's at the Carter Center in Atlanta, where they negotiated the deal.

Farm workers are paid about 40 cents for each 32-pound bucket. The extra penny a pound would nearly double their pay to about 72 cents a bucket.

Photo: A worker outside a McDonald's in Guangzhou, where the fast-food chain has been in talks with the country's largest state-run union. (Photo by Joe Tan/Reuters)